Bank means “store”, “stock” or “reservoir”. Bank that deal in financial market keep money in it and in turn invests the money that it gets from its customers in various projects. Before going to write about Islamic banks, first check what a bank does with the money it gets from its “customers”.
There are many ways a bank uses its money, like:
1: to buy shares of different companies
2: to deal in financial derivatives
3: to lend money to small and big corporate
4: to invest money in govt. projects
5: to buy bonds etc.
In whatever a bank invests its money; it earns some money which is called profit. In this way, we can call banking a form of business. The very first question should occur in the mind of people, is bank a company? Because we know that in the time of Muhammad s.a.w.w there were jews who were famous for dealing in money and taking interest and in the time of jahiliya this was not a wrong practice. Similarly, there were people who used to keep the amanah of people and were famous for this. Our beloved prophet s.a.w.w was also called SADIQ AND AMIN because HE never did the breach of trust of the people who used to keep their amanh with Him.
So, the banks lend money, and they keep the money as amanh, as per the system of banking. In islam, there is no possibility that one can earn interest on money he lends because it is haram and there is no way one can keep a part of amanh of others by calling it a fee or minimum amount limit etc. but the banks does. They not only earn interest on money but also start cutting money from the accounts of the people. they call these people their “customers” as if they are doing some kind of business with them.
But this business is not only unknown to the other party i.e. the account holders but also the banking function and they money invested by the bank is never known to them since banks do not share the true nature of their investments and business.
After the banking system of the west was criticized by the scholars, a new term was introduced as “Islamic banks”. These banks claimed that they are doing the “business” within the limits of sharia. The first And the most important thing is, people keep their money “safe” in their bank accounts, their percention is that their money is never touched but in reality their money is used without their permission, this is one objection.
Second thing is banks cannot survive if they do not deal in ribbah. So at some level banks have to deal with ribbah, which makes their business haram and their investments also haram.
Banks cut the account balance of account holders when it reaches a min. level which is total in justice and a breach amanah because one cannot cut the money of the person even if it is one rupee.
ALLAH swt says in Quran 3:75
“Among the people of the Scripture (Jews and Christians) is he who, if entrusted with a Qintar (a great amount of wealth, etc.), will readily pay it back; and among them there is he who, if entrusted with a single silver coin, will not repay it unless you constantly stand demanding, because they say: "There is no blame on us to betray and take the properties of the illiterates (Arabs)." But they tell a lie against Allâh while they know it.”
In the verse mentioned above, ALLAH swt says that there are some people who are good when they are trusted while when some of them are entrusted with even a coin they do not return it and sometimes, even snatch the other’s due unjustly making it look just. So, any business that in any way deals unjustly should be called neither Islamic nor right.
Similarly for ribbah ALLAh swt says that it is forbidden and haram. And those who deal in ribbah will be punished because it is a major sin. Expropriating other’s due share and harming them when they do not know anything about your business, is a sin. And banking is not even a business. It should be rather called a place where people can keep their amanats in safe hands.
The fatwas says that those banks, that do not deal in interest and that do not do any trade which involves any illegal activity as per sharia, with them communicating is halal.
Fataawa al-Lajnah al-Daa’imah, 13/310.
It is permissible to deal with banks and financial institutions that do not deal with riba. But if they deal with riba then it is not permissible to deal with them, and they are not Islamic banks.
And it also says in Fataawa al-Lajnah (13/365):
If the Islamic bank does not deal with riba, and rather it invests money according to shar’i principles, then it is permissible for you to deposit your money with them for investment purposes.
Otherwise, call a bank Islamic which earns even a penny of haram money, will be a sin itself. Because islam never taught us to double cross people or make a thing halal which ALLAH had made haram for us.
There are many ways a bank uses its money, like:
1: to buy shares of different companies
2: to deal in financial derivatives
3: to lend money to small and big corporate
4: to invest money in govt. projects
5: to buy bonds etc.
In whatever a bank invests its money; it earns some money which is called profit. In this way, we can call banking a form of business. The very first question should occur in the mind of people, is bank a company? Because we know that in the time of Muhammad s.a.w.w there were jews who were famous for dealing in money and taking interest and in the time of jahiliya this was not a wrong practice. Similarly, there were people who used to keep the amanah of people and were famous for this. Our beloved prophet s.a.w.w was also called SADIQ AND AMIN because HE never did the breach of trust of the people who used to keep their amanh with Him.
So, the banks lend money, and they keep the money as amanh, as per the system of banking. In islam, there is no possibility that one can earn interest on money he lends because it is haram and there is no way one can keep a part of amanh of others by calling it a fee or minimum amount limit etc. but the banks does. They not only earn interest on money but also start cutting money from the accounts of the people. they call these people their “customers” as if they are doing some kind of business with them.
But this business is not only unknown to the other party i.e. the account holders but also the banking function and they money invested by the bank is never known to them since banks do not share the true nature of their investments and business.
After the banking system of the west was criticized by the scholars, a new term was introduced as “Islamic banks”. These banks claimed that they are doing the “business” within the limits of sharia. The first And the most important thing is, people keep their money “safe” in their bank accounts, their percention is that their money is never touched but in reality their money is used without their permission, this is one objection.
Second thing is banks cannot survive if they do not deal in ribbah. So at some level banks have to deal with ribbah, which makes their business haram and their investments also haram.
Banks cut the account balance of account holders when it reaches a min. level which is total in justice and a breach amanah because one cannot cut the money of the person even if it is one rupee.
ALLAH swt says in Quran 3:75
“Among the people of the Scripture (Jews and Christians) is he who, if entrusted with a Qintar (a great amount of wealth, etc.), will readily pay it back; and among them there is he who, if entrusted with a single silver coin, will not repay it unless you constantly stand demanding, because they say: "There is no blame on us to betray and take the properties of the illiterates (Arabs)." But they tell a lie against Allâh while they know it.”
In the verse mentioned above, ALLAH swt says that there are some people who are good when they are trusted while when some of them are entrusted with even a coin they do not return it and sometimes, even snatch the other’s due unjustly making it look just. So, any business that in any way deals unjustly should be called neither Islamic nor right.
Similarly for ribbah ALLAh swt says that it is forbidden and haram. And those who deal in ribbah will be punished because it is a major sin. Expropriating other’s due share and harming them when they do not know anything about your business, is a sin. And banking is not even a business. It should be rather called a place where people can keep their amanats in safe hands.
The fatwas says that those banks, that do not deal in interest and that do not do any trade which involves any illegal activity as per sharia, with them communicating is halal.
Fataawa al-Lajnah al-Daa’imah, 13/310.
It is permissible to deal with banks and financial institutions that do not deal with riba. But if they deal with riba then it is not permissible to deal with them, and they are not Islamic banks.
And it also says in Fataawa al-Lajnah (13/365):
If the Islamic bank does not deal with riba, and rather it invests money according to shar’i principles, then it is permissible for you to deposit your money with them for investment purposes.
Otherwise, call a bank Islamic which earns even a penny of haram money, will be a sin itself. Because islam never taught us to double cross people or make a thing halal which ALLAH had made haram for us.
Post Title
→Reality of Islamic Banks
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→http://aticomorcilla.blogspot.com/2011/07/reality-of-islamic-banks.html
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